Retail figures show rise for second month

PUBLISHED : Saturday, 15 April, 2000, 12:00am
UPDATED : Saturday, 15 April, 2000, 12:00am

Retail sales rose in value for the second successive month in February as consumer confidence, buoyed by the festive season, grew in line with an overall economic resurgence.

Sales were worth HK$14.2 billion, 1 per cent higher in value for the month from a year earlier and 6 per cent higher in volume.

While February's rise was only a modest one in value terms, economists said the monthly figures should be viewed alongside the January numbers.

For the two months together, retail sales jumped 7 per cent in value and 14 per cent in volume, reflecting more robust consumer demand during the period and Hong Kong's overall economic recovery.

'Retail sales are really out of negative territory, these are very encouraging figures,' said Shamus Mok Cheung-yuk.

Mr Mok also attributed the flourishing retail sector to the wealth effect created by a booming stock market during January and February.

Increases were across the board for all consumer goods, led by a 47 per cent rise in volume in motor vehicles and parts.

Durable goods recorded a jump of 32 per cent, while furniture and fixtures rose 22 per cent.

Retail Management Association chairman Philip Ma King-huen said the growth in spending on 'big ticket' items such as cars and furniture was a firm indication that although wage growth remained flat, people felt more confident about buying more expensive goods.

Goods popular as gifts, such as jewellery, watches, clocks and clothing all had more modest rises, after people had spent in the lead up to the Lunar New Year.

Mr Mok said the positive momentum would continue although growth in sales value may slow.

'But it doesn't matter because it's still positive,' Mr Mok added.

He said the retail numbers hinted at broader economic health for the future.

With stronger sales volumes, shop-owners would be under less pressure to cut prices, as they had been last year, which would in turn help pull Hong Kong out of a long deflationary cycle.

Fred Hu Zuliu, executive director of economic research at Goldman Sachs (Asia), said the latest figures reflected the strengthening economy.

'People are more optimistic about the future,' he said.

However, he warned that recent market volatility may make consumers more cautious about spending.

Expectations of further interest rate rises could also dampen spending, he said.

On a seasonally adjusted basis, the volume of retail sales for the three months to February 29 rose 7 per cent from the three months to November 30 last year.